A Lockbox Is A

question 20

Multiple Choice

A lockbox is a:

• A)special safe used by a firm for overnight storage of any cash or undeposited checks.
• B)special safe used by a firm that can only be opened at prespecified times of the day.
• C)box located in a bank's vault that is rented by a firm and used to hold unprocessed checks.
• D)special post office box which can only be opened by prespecified postal inspectors for direct delivery to the addressee.
• E)post office box strategically located so that a firm's receivables can be collected faster.

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Definitions:

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in dividends, represented as a percentage of the company's total earnings.

Retained Earnings

Retained earnings are the portion of a company's net profits that are kept within the company instead of being paid out to the shareholders as dividends. This reinvestment is often used for business expansion or to pay off debt.

External Financing Need

The amount of funding required by a firm to cover investments and growth not financed by internal cash flows.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and the ability to fund day-to-day operations.